- ----------------------------------------------------------
THE FIRST AUSTRALIA PRIME INCOME
FUND, INC.
Portfolio of Investments
October 31, 1996
- ---------------------------------------------------------
Principal
Amount
Local
Currency Value
(000) Description (US$)
- ---------------------------------------------------------
LONG-TERM INVESTMENTS--117.4%
AUSTRALIA--112.4%
Government and Semi-Government--69.6%
Commonwealth of Australia--36.4%
Australian Capital
Territory,
A$ 10,000 12.00%, 11/15/01............ $ 9,444,374
Commonwealth Bank of
Australia,
75,000 12.00%, 7/15/99............. 66,956,605
Commonwealth of Australia,
15,000 12.50%, 1/15/98............. 12,723,309
5,000 13.00%, 4/15/98............. 4,321,025
15,000 14.00%, 4/15/99............. 13,855,011
10,000 12.00%, 7/15/99............. 8,961,264
40,000 7.00%, 4/15/00.............. 31,951,820
129,900 13.00%, 7/15/00............. 123,474,941
5,000 13.00%, 12/15/00............ 4,826,156
48,000 12.00%, 11/15/01............ 45,994,322
20,000 10.00%, 10/15/02............ 17,975,799
85,000 7.50%, 7/15/05.............. 68,227,817
15,000 10.00%, 2/15/06............. 13,976,560
170,000 10.00%, 10/15/07............ 160,671,771
84,000 8.75%, 8/15/08.............. 73,342,105
Northern Territory
Authority,
40,000 12.50%, 7/15/01............. 38,214,575
Telecom,
10,000 12.00%, 9/1/98.............. 8,660,297
--------------
703,577,751
--------------
New South Wales--8.5%
New South Wales Treasury
Corporation,
20,000 7.50%, 2/1/98............... 16,063,104
57,000 12.00%, 12/1/01............. 54,381,417
85,000 7.00%, 4/1/04............... 65,696,218
7,000 10.50%, 12/7/04............. 6,487,031
20,000 12.60%, 5/1/06.............. 21,216,874
--------------
163,844,644
--------------
- ---------------------------------------------------------
Principal
Amount
Local
Currency Value
(000) Description (US$)
- ---------------------------------------------------------
Queensland--4.6%
Queensland Treasury
Corporation,
A$ 10,000 8.00%, 7/14/99.............. $ 8,179,748
10,000 8.00%, 8/14/01.............. 8,213,964
45,000 8.00%, 5/14/03.............. 36,906,645
20,000 12.00%, 6/15/05............. 20,146,539
20,000 8.00%, 9/14/07.............. 16,373,166
--------------
89,820,062
--------------
South Australia--5.8%
Electricity Trust of South
Australia,
5,000 13.00%, 10/1/05............. 5,291,848
South Australian Financing
Authority,
30,000 12.50%, 3/15/98............. 25,629,125
90,000 10.00%, 1/15/03............. 80,592,713
--------------
111,513,686
--------------
Tasmania--4.0%
Tasmanian Public Finance
Corporation,
13,000 12.50%, 1/15/01............. 12,235,360
75,000 9.00%, 11/15/04............. 64,603,303
--------------
76,838,663
--------------
Victoria--5.1%
Treasury Corporation of
Victoria,
36,000 12.50%, 10/15/03............ 36,407,530
65,500 10.25%, 11/15/06............ 61,690,965
--------------
98,098,495
--------------
Western Australia--5.2%
Western Australia Treasury Corporation,
10,000 12.50%, 4/1/98.............. 8,563,500
100,000 10.00%, 7/15/05............. 91,720,799
--------------
100,284,299
--------------
Total Australian government
and semi-government
(cost US$1,222,766,163)..... 1,343,977,600
--------------
See Notes to
Financial Statements.
7
- ---------------------------------------------------------
Principal
Amount
Local
Currency Value
(000) Description (US$)
- ---------------------------------------------------------
Eurobonds--33.3%
Banking and Finance--11.8%
Australia Industrial
Development Corporation,
A$ 5,000 8.75%, 7/20/04.............. $ 4,232,650
Bank Austria AG,
10,000 10.875%, 11/17/04........... 9,364,119
Banque National de Paris,
14,000 9.00%, 8/13/02.............. 11,899,234
Commerzbank Overseas
Finance,
5,000 10.50%, 1/19/00............. 4,341,817
10,000 10.25%, 4/28/00............. 8,668,385
Commonwealth Bank of
Australia,
11,000 12.75%, 1/7/98.............. 9,300,360
10,000 9.00%, 8/15/05.............. 8,617,596
Eksport Finance & Insurance,
4,000 7.00%, 6/28/00.............. 3,154,643
19,000 11.00%, 12/29/04............ 18,056,976
Finnish Eksport Credit,
2,925 9.25%, 12/30/99............. 2,458,503
GG Securities,
5,000 9.25%, 3/24/03.............. 4,283,796
Korea Development Bank,
23,000 7.50%, 8/9/99............... 18,502,680
Morgan Guaranty Trust,
10,000 8.00%, 4/18/07.............. 8,138,625
National Australia Bank,
25,000 8.00%, 4/10/01.............. 20,406,609
Primary Industry Bank of
Australia,
5,000 8.00%, 5/15/98.............. 4,040,917
5,000 6.75%, 2/25/99.............. 3,944,001
Rural & Industries Bank of
Western Australia,
5,000 8.75%, 9/9/99............... 4,137,666
Societe Generale Australia,
5,000 7.75%, 2/19/01.............. 4,032,515
South Australia Financing
Authority,
5,000 11.25%, 10/23/01............ 4,592,514
State Bank of New South
Wales,
10,500 12.25%, 2/26/01............. 9,859,043
20,000 11.75%, 8/16/01............. 18,666,545
23,000 10.75%, 3/12/02............. 20,854,677
10,000 9.25%, 2/18/03.............. 8,625,620
State Bank of South
Australia,
10,000 11.00%, 4/10/02............. 9,175,315
10,000 9.50%, 10/15/02............. 8,662,327
--------------
228,017,133
--------------
- ---------------------------------------------------------
Principal
Amount
Local
Currency Value
(000) Description (US$)
- ---------------------------------------------------------
Diversified Industrials--1.0%
Australian National Railway,
A$ 4,000 9.50%, 2/25/99.............. $ 3,340,392
Federal Airports
Corporation,
20,000 7.00%, 2/16/04.............. 15,048,640
Shell Australia,
1,786 10.00%, 12/19/97............ 1,464,521
--------------
19,853,553
--------------
Semi-Government and Local Government--11.6%
New South Wales Treasury Corporation,
10,000 7.50%, 2/1/98............... 8,037,637
33,000 11.50%, 7/1/99.............. 29,190,385
70,000 12.00%, 12/1/01............. 66,751,836
10,000 7.00%, 4/1/04............... 7,768,075
10,000 10.00%, 6/6/05.............. 9,077,417
30,000 6.50%, 5/1/06............... 22,116,406
34,000 12.60%, 5/1/06.............. 35,757,830
Province Aples Cotes D'Azur,
22,000 8.25%, 9/15/99.............. 17,935,138
Province of Quebec,
16,000 9.50%, 10/2/02.............. 13,634,522
State Electricity Commission
of Victoria,
7,000 9.25%, 9/18/03.............. 6,058,328
Treasury Corporation of
Victoria,
10,000 8.25%, 10/15/03............. 8,301,070
--------------
224,628,644
--------------
Supranational Global--8.9%
Credit Locale de France,
20,000 8.75%, 7/23/01.............. 16,736,801
5,000 10.25%, 4/12/05............. 4,574,847
Eurofima,
68,170 9.875%, 1/17/07............. 62,704,940
European Bank of
Reconstruction &
Development,
85,000 9.00%, 10/15/02............. 67,610,419
European Investment Bank,
23,000 10.25%, 10/1/01............. 20,614,464
--------------
172,241,471
--------------
Total Australian eurobonds
(cost US$588,891,942)....... 644,740,801
--------------
See Notes to
Financial Statements.
8
- ---------------------------------------------------------
Principal
Amount
Local
Currency Value
(000) Description (US$)
- ---------------------------------------------------------
Corporate Bonds--9.5%
Asset Backed--0.1%
FANMAC Limited,
A$ 578 10.33%, 6/15/02............. $ 496,651
Premier Trust 22,
2,545 11.40%, 12/15/01............ 2,210,382
--------------
2,707,033
--------------
Floating Rate Notes*--3.7%
Ford Credit Australia
Limited,
5,000 7.92%, 4/27/98.............. 3,980,017
GIO Australia Holdings
Limited,
14,500 7.275%, 11/16/98............ 11,551,939
Mortgage Power Company,
15,000 7.96%, 6/12/06.............. 11,905,440
National Mutual Home Loans,
4,989 7.1317%, 12/1/23............ 3,955,645
Puma Management Limited,
20,000 7.253%, 12/5/28............. 15,992,070
15,000 7.50%, 12/5/28.............. 12,039,251
Rams,
10,000 7.1317%, 3/15/25............ 7,945,762
Residential Mortgage Backed
Trust,
5,000 7.2517%, 10/7/22............ 3,972,802
--------------
71,342,926
--------------
Services--5.7%
Australian & Overseas
Telecommunication
Corporation,
45,000 12.50%, 11/15/00............ 42,394,953
20,000 11.50%, 10/15/02............ 18,926,302
2,000 7.80%, 7/17/03.............. 1,606,455
31,000 12.00%, 5/15/06............. 31,619,213
2,000 8.75%, 1/15/20.............. 1,716,200
Federal Airports
Corporation,
5,000 10.50%, 7/15/99............. 4,307,708
10,000 8.25%, 6/2/03............... 8,189,676
Macquarie Bank Limited,
1,000 9.75%, 8/1/00............... 845,746
--------------
109,606,253
--------------
Total Australian corporate
bonds
(cost US$163,490,280)....... 183,656,212
--------------
Total Australian long-term investments
(cost US$1,975,148,385)..... 2,172,374,613
--------------
- ---------------------------------------------------------
Principal
Amount
Local
Currency Value
(000) Description (US$)
- ---------------------------------------------------------
NEW ZEALAND--5.0%
Eurobonds--1.8%
Societe Generale Australia,
NZ$ 5,000 9.00%, 5/29/98.............. $ 3,572,691
25,000 9.50%, 7/29/98.............. 18,101,986
Telecom New Zealand Finance,
5,000 10.00%, 7/10/98............. 3,670,754
1,500 9.25%, 7/1/02............... 1,134,356
Transport Power Finance
Limited,
10,000 8.00%, 3/15/02.............. 7,214,361
--------------
Total New Zealand eurobonds
(cost US$32,573,291)........ 33,694,148
--------------
Government Bonds--3.2%
New Zealand Government
Bonds,
20,000 6.50%, 2/15/00.............. 13,849,954
35,000 10.00%, 3/15/02............. 27,659,425
13,000 8.00%, 4/15/04.............. 9,553,268
15,000 8.00%, 11/15/06............. 11,130,310
--------------
Total New Zealand government bonds
(cost US$58,823,788)........ 62,192,957
--------------
Total New Zealand long-term
investments
(cost US$91,397,079)........ 95,887,105
--------------
Total long-term investments
(cost US$2,066,545,464)..... 2,268,261,718
--------------
SHORT-TERM INVESTMENTS--11.4%
AUSTRALIA--9.1%
Demand Deposit--4.6%
BNP Bank Demand Deposit,
A$ 112,597 (cost US$89,164,205)........ 89,285,020
--------------
New South Wales--2.3%
New South Wales Treasury
Corporation,
55,400 12.50%, 4/1/97
(cost US$48,402,749)...... 44,984,220
--------------
Eurobonds--2.2%
Banking and Finance--0.1%
BMW Australia Finance,
1,700 10.25%, 3/17/97............. 1,363,003
--------------
Diversified Industrial--0.2%
Shell Australia,
5,000 10.125%, 4/1/97............. 4,014,309
--------------
See Notes to
Financial Statements.
9
- ---------------------------------------------------------
Principal
Amount
Local
Currency Value
(000) Description (US$)
- ---------------------------------------------------------
Semi-Government and Local Government--1.5%
Queensland Treasury
Corporation,
A$ 35,000 8.00%, 5/14/97.............. $ 27,957,759
--------------
Supranational Global--0.4%
Credit Locale de France,
10,000 7.50%, 9/15/97.............. 7,994,608
--------------
Total Australian eurobonds
(cost US$35,334,830)...... 41,329,679
--------------
Total Australian short-term
investments
(cost US$172,901,784)..... 175,598,919
--------------
NEW ZEALAND--1.1%
Government Bond
New Zealand Government Bond,
NZ$ 30,000 10.00%, 7/15/97
(cost US$21,170,774)...... 21,464,407
--------------
UNITED STATES--1.2%
US$ 22,838 Repurchase Agreement, State
Street Bank and Trust Co.,
5.50% dated 10/31/96 due
11/1/96 in the amount of
$22,841,489 (cost
US$22,838,000;
collateralized by
US$19,900,000 United
States Treasury Bill, due
8/15/19; value including
accrued interest-
US$23,639,284)............ 22,838,000
--------------
Total short-term investments
(cost US$216,910,558)....... 219,901,326
--------------
Total Investments--128.8%
(cost US$2,283,456,022;
Note 3)................... 2,488,163,044
Other assets in excess of
other liabilities--2.3%... 43,731,136
Liquidation value of
preferred
stock--(31.1%)............ (600,000,000)
--------------
Net Assets Applicable to
Common
Shareholders--100%........ $1,931,894,180
--------------
--------------
- ---------------
* The interest rate reflected for floating rate notes is the
rate in effect at
October 31, 1996.
- ----------------------------------------------------------
THE FIRST AUSTRALIA PRIME INCOME
FUND, INC.
Statement of Assets and Liabilities
October 31, 1996
- ----------------------------------------------------------
Assets
Investments, at value (cost
$2,283,456,022)..................... $2,488,163,044
Foreign currency, at value (cost
$349,660)........................... 353,869
Cash.................................. 1,281,231
Interest receivable................... 63,095,539
Other assets.......................... 149,440
--------------
Total assets...................... 2,553,043,123
--------------
Liabilities
Dividends payable-common stock........ 13,619,183
Withholding taxes payable............. 3,628,257
Accrued expenses and other
liabilities......................... 1,514,569
Dividends payable-preferred stock..... 1,175,536
Investment management fee payable..... 1,020,766
Administration fee payable............ 190,632
--------------
Total liabilities................. 21,148,943
--------------
Total Net Assets...................... $2,531,894,180
--------------
--------------
Total net assets were composed of:
Common stock:
Par value ($.01 per share,
applicable to 194,559,756
shares)..................... $ 1,945,598
Paid-in capital in excess of
par............................... 1,672,741,860
Preferred stock ($.01 par value per
share and $25,000 liquidation
value per share applicable to
24,000 shares; Note 4)............ 600,000,000
--------------
2,274,687,458
Distributions in excess of net
investment income................. (4,799,630)
Accumulated net realized gains on
investments....................... 937,851
Net unrealized appreciation on
investments......................... 105,542,234
Accumulated net realized and
unrealized foreign exchange
gains............................. 155,526,267
--------------
Total net assets.................... $2,531,894,180
--------------
--------------
Net assets applicable to common
shareholders...................... $1,931,894,180
--------------
--------------
Net asset value per common share:
($1,931,894,180 / 194,559,756 shares
of common stock issued and
outstanding)........................ $9.93
--------------
--------------
See Notes to Financial Statements. See Notes to
Financial Statements.
10
- ----------------------------------------------------------
THE FIRST AUSTRALIA PRIME INCOME
FUND, INC.
Statement of Operations
Year Ended October 31, 1996
- ----------------------------------------------------------
Net Investment Income
Income
Interest and discount earned (net of
foreign withholding taxes of
$12,958,897)....................... $170,176,632
------------
Expenses
Investment management fee............ 11,251,987
Custodian's fees and expenses........ 2,750,000
Administration fee................... 2,465,669
Auction agent's fees and broker
commissions.......................... 1,370,000
Shareholder relations and
communications....................... 968,000
Transfer agent's fees and expenses... 650,000
Directors' fees and expenses......... 516,000
Independent accountant's fees and
expenses............................. 212,000
Legal fees and expenses.............. 200,000
Insurance expense.................... 101,000
Miscellaneous........................ 76,139
------------
Total operating expenses............. 20,560,795
------------
Net investment income before excise
tax.................................. 149,615,837
Excise tax........................... (424,473)
------------
Net investment income.................. 149,191,364
------------
Realized and Unrealized
Gains on Investments
and Foreign Currencies
Net realized gains on investment
transactions......................... 3,752,308
Net change in unrealized appreciation
on investments....................... 127,372,784
------------
Net gains on investments............... 131,125,092
------------
Net increase in total net assets from
operations before net foreign
exchange gains....................... 280,316,456
Net realized and unrealized foreign
exchange gains....................... 70,488,385
------------
Net Increase In Total Net Assets
Resulting From Operations.............. $350,804,841
------------
------------
- ----------------------------------------------------------
THE FIRST AUSTRALIA PRIME INCOME
FUND, INC.
Statement of Cash Flows
Year Ended October 31, 1996
- ----------------------------------------------------------
Increase (Decrease) in Cash
(Including Foreign Currency)
Cash flows used for operating
activities
Interest received (net of foreign
withholding taxes)............... $ 158,540,037
Expenses paid...................... (21,122,063)
Sales of short-term portfolio
investments, net................... 9,043,862
Purchases of long-term portfolio
investments........................ (1,857,106,859)
Proceeds from sales of long-term
portfolio
investments...................... 1,340,564,521
Other.............................. (74,850)
---------------
Net cash used for operating
activities....................... (370,155,352)
---------------
Cash flows provided from financing
activities
Net proceeds from issuance of
preferred shares................. 122,958,530
Net proceeds from rights
offering......................... 299,771,852
Dividends and distributions paid to
preferred shareholders........... (26,550,398)
Dividends and distributions paid to
common
shareholders (net of $5,241,634
paid in the issuance of
shares).......................... (140,203,862)
---------------
Net cash provided from financing
activities....................... 255,976,122
---------------
Effect of changes in exchange rate... 64,689,043
---------------
Net decrease in cash................. (49,490,187)
Cash at beginning of year.......... 51,125,287
---------------
Cash at end of year................ $ 1,635,100
---------------
---------------
Reconciliation of Net Increase in Total
Net Assets from Operations to Net Cash
(Including Foreign Currency) Used For
Operating Activities
Net increase in total net assets
resulting from
operations......................... $ 350,804,841
---------------
Increase in investments............ (496,379,614)
Increase in interest receivable.... (11,916,913)
Net increase in other assets....... (74,850)
Increase in accrued expenses and
other liabilities................ 143,523
Decrease in payable for investments
purchased........................ (11,118,862)
Net realized gain on investment
transactions....................... (3,752,308)
Net change in unrealized
appreciation on
investments...................... (127,372,784)
Net realized and unrealized foreign
exchange gains................... (70,488,385)
---------------
Total adjustments................ (720,960,193)
---------------
Net cash used for operating
activities........................... $ (370,155,352)
---------------
---------------
See Notes to Financial Statements. See Notes to
Financial Statements.
11
- ----------------------------------------------------------
THE FIRST AUSTRALIA PRIME INCOME
FUND, INC.
Statement of Changes
in Net Assets
- ----------------------------------------------------------
Year Ended October 31,
Increase (Decrease) -------------------------------
in Total Net Assets 1996 1995
-------------- --------------
Operations
Net investment income... $ 149,191,364 $ 130,160,245
Net realized gains on
investment
transactions.......... 3,752,308 18,189,710
Net change in unrealized
appreciation
(depreciation) on
investments........... 127,372,784 89,317,008
-------------- --------------
Net increase in total
net assets resulting
from operations before
net foreign exchange
gains................. 280,316,456 237,666,963
Net realized and
unrealized foreign
exchange gains........ 70,488,385 54,519,666
-------------- --------------
Net increase in total net
assets resulting from
operations.............. 350,804,841 292,186,629
-------------- --------------
Dividends to shareholders
from net investment
income
Common shares........... (142,448,343) (114,007,842)
Preferred shares........ (23,607,820) (22,484,591)
-------------- --------------
(166,056,163) (136,492,433)
-------------- --------------
Distributions to
shareholders
from net realized
capital gains
Common shares........... (4,985,403) (20,904,930)
Preferred shares........ (3,046,221) (2,142,800)
-------------- --------------
(8,031,624) (23,047,730)
-------------- --------------
Fund share transactions
Net proceeds from
issuance of preferred
shares................ 122,958,530 73,620,000
Net proceeds from rights
offering of Fund
shares................ 299,771,852 224,618,810
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions and in
connection with
dividends paid in
stock................. 5,241,634 7,688,453
-------------- --------------
427,972,016 305,927,263
-------------- --------------
Total increase............ 604,689,070 438,573,729
Total Net Assets
Beginning of year......... 1,927,205,110 1,488,631,381
-------------- --------------
End of year............... $2,531,894,180 $1,927,205,110
-------------- --------------
-------------- --------------
- ----------------------------------------------------------
THE FIRST AUSTRALIA PRIME INCOME FUND, INC.
Notes to Financial Statements
- ----------------------------------------------------------
The First Australia Prime Income Fund, Inc. (the
``Fund'') was incorporated
in Maryland on March 14, 1986 as a closed-end, non-
diversified investment
company. The Fund's investment objective is current income
through investment
primarily in Australian debt securities. The Fund may also
achieve incidental
capital appreciation. It is expected that normally at least
65% of the Fund's
total assets will be invested in Australian dollar
denominated debt securities
of Australian banks and federal and state governmental and
corporate entities.
To achieve its investment objective, the Fund may invest the
remainder of its
assets in debt securities of comparable quality which are
denominated in
Australian or New Zealand dollars of other issuers, whether
or not domiciled in
Australia or New Zealand, and in U.S. Government securities
and corporate and
bank debt securities of U.S. issuers rated Aa or Prime-2 or
better by Moody's
Investors Service, Inc. (``Moody's'') or AA or A-2 or better
by Standard &
Poor's Corporation (``S&P''). It is the Fund's policy to
limit its investments,
as to 65% of its total assets, to issuers of debt securities
rated AA or better
by S&P--Australian Ratings Pty. Ltd. or S&P or Aa or better
by Moody's or which, in the judgement of the Investment
Manager, are of equivalent quality. The remainder of the
Fund's investments will be rated A by those rating agencies
or, if unrated,
will in the Investment Manager's judgement be of equivalent
quality. The ability of issuers of debt securities,
including foreign currency balances on deposit with the
Fund's Australian and New Zealand subcustodian banks, held
by the Fund to meet
their obligations may be affected by economic or political
developments in a specific industry or region.
Note 1. Accounting The following is a summary of
significant accounting
policies Policies
followed by the Fund in the
preparation of its
financial statements.
Basis of Presentation: The financial statements of the Fund
are prepared in
accordance with United States generally accepted accounting
principles using the United States dollar as both the
functional and reporting currency.
Security Valuation: Investments are stated at value.
Investments for which
market quotations are readily available are valued based on
prices provided by a pricing service or the lower of the
quotations from two leading Australian or
New Zealand brokers in the debt securities market, in the
event that
See Notes to Financial Statements.
12
a price cannot be obtained by the pricing service.
Securities for which market
quotations are not readily available are valued at fair
value using methods
determined in good faith by or under the direction of the
Fund's Board of
Directors.
Short-term securities which mature in more than 60 days
are valued at current market quotations. Short-term
securities which mature in 60 days or less are valued at
amortized cost.
In connection with transactions in repurchase agreements
with U.S. financial
institutions, it is the Fund's policy that its custodian
take possession of the
underlying collateral securities, the value of which exceeds
the principal
amount of the repurchase transaction, including accrued
interest. To the extent
that any repurchase transaction exceeds one business day,
the collateral is
valued on a daily basis to determine its adequacy. If the
seller defaults and
the value of the collateral declines or if bankruptcy
proceedings are commenced
with respect to the seller of the security, realization of
the collateral by the Fund may be delayed or limited.
Foreign Currency Translation: Australian dollar (``A$'') and
New Zealand dollar
(``NZ$'') amounts are translated into United States dollars
on the following
basis:
(i) market value of investment securities, other assets
and liabilities at the exchange rates at the end
of the fiscal year;
(ii) purchases and sales of investment securities, income
and expenses at
the rates of exchange prevailing on the respective
dates of such
transactions.
The Fund isolates that portion of the results of
operations arising as a
result of changes in the foreign exchange rates from the
fluctuations arising
from changes in the market prices of the securities held at
fiscal year end.
Similarly, the Fund isolates the effect of changes in
foreign exchange rates
from the fluctuations arising from changes in the market
prices of portfolio
securities sold during the fiscal year.
Net realized and unrealized foreign exchange gains of
$70,488,385 include
realized foreign exchange gains and losses from sales and
maturities of
portfolio securities, sales of foreign currencies, currency
gains or losses
realized between the trade and settlement dates on
securities transactions, the
difference between the amounts of interest, discount and
foreign withholding
taxes recorded on the Fund's books and the US dollar
equivalent amounts actually received or paid and changes in
unrealized foreign exchange gains and losses in the value of
portfolio securities and other assets and liabilities
arising as a result
of changes in the exchange rate. Accumulated net realized
and unrealized foreign exchange gains shown in the
composition of net assets at October 31, 1996 represent
foreign exchange gains for book purposes that have not yet
been recognized for tax
purposes.
Foreign security and currency transactions may involve
certain considerations
and risks not typically associated with those of domestic
origin, including
unanticipated movements in the value of the foreign currency
relative to the
U.S. dollar.
The exchange rate at October 31, 1996 was US$.7930 to
A$1.00 for the
Australian dollar and US$.6781 to NZ$1.00 for the New
Zealand dollar.
Securities Transactions and Investment Income: Securities
transactions are
recorded on the trade date. Realized and unrealized gains
and losses from
security and currency transactions are calculated on the
identified cost basis.
Interest income is recorded on an accrual basis. Discounts
on short-term
securities are accreted over the life of the security.
Dividends and Distributions: It is the Fund's current policy
to pay dividends
from net investment income monthly. The Fund will also
declare and pay
distributions at least annually from net realized gains on
investment
transactions and net realized foreign exchange gains, if
any. Dividends and
distributions to common shareholders are recorded on the ex-
dividend date.
Dividends and distributions to preferred shareholders are
accrued on a weekly
basis and are determined as described in Note 4.
Income distributions and capital and currency gains
distributions are
determined in accordance with income tax regulations which
may differ from
generally accepted accounting principles. These differences
are primarily due to differing treatments for foreign
currencies, loss deferrals and recognition of market
discount.
Taxes: For federal income and excise tax purposes,
substantially all of the
Fund's transactions are accounted for using the Australian
dollar as the
functional currency. Accordingly, only realized currency
gains and losses
resulting from the repatriation of Australian dollars into
United States dollars or transactions in New Zealand dollars
are recognized for tax purposes.
No provision has been made for United States income taxes
because it is the
Fund's policy to continue to meet the requirements of the
United States Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable
income to shareholders. Provision has been made for United
States excise
taxes incurred during the fiscal year. Australia and New
Zealand impose a withholding tax of 10% on most interest and
discount earned.
Cash Flow Information: The Fund invests in securities and
distributes dividends
from net investment income and net realized gains from
investment and currency
transactions which are paid in cash or are reinvested at the
discretion of
13
shareholders. These activities are reported in the Statement
of Changes in Net
Assets and additional information on cash receipts and cash
payments is
presented in the Statement of Cash Flows. Cash includes
domestic and foreign
currency.
Reclassification of Capital Accounts: The Fund accounts and
reports for
distributions to shareholders in accordance with Statement
of Position 93-2:
Determination, Disclosure, and Financial Statement
Presentation of Income,
Capital Gain, and Return of Capital Distributions by
Investment Companies.
During the fiscal year ended October 31, 1996, the Fund
increased undistributed
net investment income by $ , decreased accumulated
net realized gains
on investments by $ , decreased accumulated net
realized foreign
exchange gains by $ and decreased paid-in capital in
excess of par by
$ . Net investment income, net realized gains and net
assets were not
affected by this change.
Note 2. Agreements The Fund has agreements
with EquitiLink International
Management Limited
(the ``Investment Manager''), EquitiLink Australia Limited
(the ``Investment
Adviser''), The Prudential Insurance Company of America (the
``Consultant''),
and Prudential Mutual Fund Management, LLC. (the
``Administrator''). The
Investment Manager and the Investment Adviser are affiliated
companies; the
Administrator is an indirect wholly-owned subsidiary of the
Consultant.
The Investment Manager makes investment decisions on
behalf of the Fund on
the basis of recommendations and information furnished to it
by the Investment
Adviser and the Consultant, including the selection of and
the placement of
orders with brokers and dealers to execute portfolio
transactions on behalf of
the Fund.
The management agreement provides the Investment Manager
with a fee, computed weekly and payable monthly, at the
following annual rates: 0.65% of the Fund's average weekly
total net assets of common and preferred shareholders up to
$200 million,
0.60% of such assets between $200 million and $500 million,
0.55% of such assets between $500 million and $900 million
and 0.50% of such assets in excess of $900 million.
Effective June 1, 1996, the Investment Manager received a
fee at the following
annual rates: 0.65% of the Fund's average weekly total net
assets of common and preferred shareholders up to $200
million, 0.60% of such assets between $200 million and $500
million, 0.55% of such assets between $500 million and $900
million, 0.50%
of such assets between $900 million and $1,750 million and
0.45% of such assets in excess of $1,750 million.
The administration agreement provides the Administrator
with a fee at the
annual rate of 0.15% of the Fund's average weekly total net
assets of common and preferred shareholders up to $900
million and 0.10% of such assets in excess of $900 million.
Effective June 1, 1996 the Administrator received a fee at
the annual rate
of 0.15% of the Fund's average weekly total net assets of
common and preferred shareholders up to $900 million, 0.10%
of such assets between $900 million and $1,750 million and
0.07% of such assets in excess of $1,750 million. The
Investment Manager
pays fees to the Investment Adviser and the Consultant for
their services rendered. The Investment Manager informed the
Fund that it paid $4,841,352 to the Investment Adviser and
$309,208 to the Consultant during the fiscal year ended
October 31,
1996.
Note 3. Portfolio Purchases and sales of invest-
Securities ment securities, other than
short-term investments, for
the fiscal year ended
October 31, 1996 aggregated $1,677,260,895 and
$1,220,280,347, respectively.
The United States federal income tax basis of the Fund's
investments at
October 31, 1996 was $2,488,163,044 and accordingly, net
unrealized appreciation for United States federal income tax
purposes was $203,771,009 (gross unrealized appreciation--
$207,325,563; gross unrealized depreciation--$3,554,554).
Note 4. Capital There are 200 million shares
of common stock authorized. Of
the 194,559,756
common shares outstanding at October 31, 1996, the
Investment Manager owned
52,759 shares.
In connection with a rights offering, shareholders of
record on May 1, 1996
were issued one-fifth of a non-transferable right for each
full share of common
stock owned, entitling shareholders the opportunity to
acquire one newly issued
share of common stock for every whole right held at a
subscription price equal
to a 5% discount from the lesser of net asset value on the
expiration date (May
23, 1996) or the average market value on that date and the
four business days
preceding the expiration date. On May 29, 1996 the Fund
issued 38,911,951 shares of common stock at $8.03 per share.
Rights offering costs estimated at
$1,364,332 ($.01 per share) and brokerage and dealer-manager
commissions of
$11,326,783 ($.07 per share) were charged to paid-in capital
of common
shareholders resulting in net proceeds to the Fund of
$299,771,852. The net
asset value per share of the Fund's common shareholders was
reduced by
approximately $.39 per share as a result of this share
issuance. Prudential
Securities Incorporated (``PSI''), an affiliate of the
Consultant and the
Administrator, and its financial advisors earned
approximately
14
$3,104,000 of the aforementioned commissions with respect to
its participation
in the rights offering.
The Fund issued 568,703 shares during the fiscal year
ended October 31, 1996
in connection with the reinvestment of dividends and
distributions paid to
shareholders in the dividend reinvestment plan.
During the fiscal year ended October 31, 1995 the Fund
issued 30,723,350
shares of common stock (net proceeds $224,618,810) in
connection with a rights
offering of the Fund's shares. The Fund also issued 177,377
shares in connection with the reinvestment of dividends and
distributions paid to shareholders enrolled in the dividend
reinvestment plan and 702,496 shares in connection with a
cash
dividend paid in stock.
The Preferred Stock have rights as determined by the
Board of Directors. The
24,000 shares of Auction Market Preferred Stock (``Preferred
Stock'')
outstanding consist of nine series as follows: Series A--
3,000 shares, Series
B--3,000 shares, Series C--2,000 shares, Series D--4,000
shares, Series E--2,000 shares, Series F--2,000 shares,
Series G--3,000 shares, Series H--2,500 shares and Series I-
- -2,500 shares.
Effective April 25, 1996 Series A through Series F
Preferred Stock was split
(4:1) resulting in a liquidation value of $25,000 per share
plus any accumulated but unpaid dividends. Series G, H and I
Preferred Stock were originally issued with a liquidation
value of $25,000 per share plus any accumulated but unpaid
dividends.
On September 10, 1996 the Fund issued $62,500,000 in
liquidation value of Series H preferred shares and
$62,500,000 in liquidation value of Series I preferred
shares. Preferred share offering costs of $161,362 and
underwriting discounts of $859,375
per Series were charged to paid-in capital of common
shareholders resulting in net proceeds to the Fund of
$61,479,265 per series. PSI advised the Fund that it
received $1,718,750 in underwriting fees in connection with
the Series H and Series I
preferred share offering.
During the fiscal year ended October 31, 1995 the Fund
issued $75,000,000 in
liquidation value of Series G preferred shares. Preferred
share offering costs
of $255,000 and underwriting discounts of $1,125,000 were
charged to paid-in
capital of common shareholders resulting in net proceeds to
the Fund of
$73,620,000.
Dividends on each series of Preferred Stock are
cumulative at a rate
established at the initial public offering and are typically
reset every 28 days for Series A through D and every seven
days for Series E through I based on the results of an
auction. Dividend rates ranged from 4.75% to 6.00% during
the fiscal year
ended October 31, 1996. Under the Investment Company Act of
1940, the Fund may not declare dividends or make other
distributions on shares of common stock or purchase any such
shares if, at the time of the declaration,
distribution or purchase, asset coverage with respect to the
outstanding
Preferred Stock would be less than 200%.
The Preferred Stock is redeemable at the option of the
Fund, in whole or in
part, on any dividend payment date at liquidation value plus
any accumulated but unpaid dividends. The Preferred Stock is
also subject to mandatory redemption at liquidation value
plus any accumulated but unpaid dividends if certain
requirements
relating to the composition of the assets and liabilities of
the Fund as set forth in the Articles of Incorporation are
not satisfied.
The holders of Preferred Stock have voting rights equal
to the holders of
common stock (one vote per share) and will vote together
with holders of shares
of common stock as a single class. However, holders of
Preferred Stock are also
entitled to elect two of the Fund's directors.
Note 5. Dividends On November 18, 1996 the
And Distributions Board of Directors of the Fund
declared a distribution from
undistributed net
investment income of $.07 per common share payable on
December 13, 1996 to
common shareholders of record on November 29, 1996.
On December 16, 1996 the Board of Directors of the Fund
declared a
distribution of $ per common share comprised of $ per
share from capital
gains and $ per share from net investment income
payable on January 17,
1997 to shareholders of record on December 31, 1996.
Subsequent to October 31, 1996, dividends and
distributions declared and paid on Preferred Stock totalled
approximately $3,324,500 for the nine outstanding preferred
share series in the aggregate through December 13, 1996.
15
- ------------------------------------------------------------
- -------------------
THE FIRST AUSTRALIA PRIME INCOME FUND, INC.
Financial Highlights
- ------------------------------------------------------------
- -------------------
Years ended October 31,
-------
- ------------------------------------------------------------
- --
PER SHARE OPERATING PERFORMANCE: 1996*
1995* 1994 1993 1992
-------
- --- ---------- -------- ---------- ------
- --
Net asset value per common share, beginning of
year............................................. $
9.36 $ 8.82 $ 10.09 $ 9.61 $
11.31
-------
- --- ---------- ---------- ---------- ------
- --
Net investment income..............................
.87 .93 1.01 1.19
1.29
Net realized and unrealized gain (loss) on
investments and foreign currencies...............
1.17 1.16 (1.03) .58
(1.42)
-------
- --- ---------- ---------- ---------- ------
- --
Total from investment operations.................
2.04 2.09 (.02) 1.77
(.13)
-------
- --- ---------- ---------- ---------- ------
- --
Dividends from net investment income to preferred
shareholders.....................................
(.15) (.17) (.12) (.11)
(.14)
Dividends from net investment income to common
shareholders.....................................
(.86) (.83) (.84) (1.08)
(1.10)
Distributions from net capital and currency gains
to preferred shareholders........................
(.02) (.01) (.01) (.01)
(.01)
Distributions from net capital and currency gains
to common shareholders...........................
(.03) (.15) (.17) (.08)
(.29)
-------
- --- ---------- ---------- ---------- ------
- --
Total dividends and distributions................
(1.06) (1.16) (1.14) (1.28)
(1.54)
-------
- --- ---------- ---------- ---------- ------
- --
Capital charge in respect to issuance of shares....
(.41) (.39) (.11) (.01)
(.03)
-------
- --- ---------- ---------- ---------- ------
- --
Net asset value per common share, end of year...... $
9.93 $ 9.36 $ 8.82 $ 10.09 $
9.61
-------
- --- ---------- ---------- ---------- ------
- --
-------
- --- ---------- ---------- ---------- ------
- --
Market price per common share, end of year......... $
8.94 $ 9.31 $ 9.56 $ 10.25 $
10.00
-------
- --- ---------- ---------- ---------- ------
- --
-------
- --- ---------- ---------- ---------- ------
- --
TOTAL INVESTMENT RETURN BASED ON(D):
Market value.......................................
8.78% 3.32% 15.00% 4.11%
Net asset value....................................
18.54% (3.19)% 17.80% (3.22)%
RATIOS TO AVERAGE NET ASSETS OF COMMON
SHAREHOLDERS/SUPPLEMENTAL DATA#:
Expenses(D)(D).....................................
1.19% 1.47% 1.41% 1.44%
1.43%
Net investment income before preferred stock
dividends........................................
8.43% 10.83% 10.68% 12.13%
12.14%
Preferred stock dividends..........................
1.33% 1.87% 1.20% 1.13%
1.25%
Net investment income available to common
shareholders.....................................
7.10% 8.96% 9.48% 11.00%
10.89%
Portfolio turnover rate............................
61% 50% 34% 23%
17%
Net assets of common shareholders, end of year (000
omitted).........................................
$1,931,894 $1,452,205 $1,088,631 $1,050,084
$977,933
Average net assets of common shareholders (000
omitted).........................................
$1,770,521 $1,201,383 $1,174,394 $1,011,324
$938,072
Senior securities (preferred stock) outstanding
(000 omitted).................................... $
600,000 $ 475,000 $ 400,000 $ 350,000
$300,000
Asset coverage of preferred stock at year end......
422% 406% 372% 400%
426%
- ---------------
* Calculated based upon weighted average shares
outstanding during the year.
(D) Total investment return is calculated assuming a
purchase of common stock on the first day and a sale
on the last day of each year reported. Dividends and
distributions are assumed, for purposes of this
calculation, to be reinvested at prices obtained
under the Fund's dividend reinvestment plan. Total
investment return does not reflect brokerage
commissions.
(D)(D) Includes expenses of both preferred and common stock.
# Ratios calculated on the basis of income, expenses
and preferred share dividends applicable to both the
common and preferred shares relative to the average
net assets of common shareholders.
NOTE: Contained above is operating performance for a share
of common stock outstanding, total investment
return, ratios to average net assets of common
shareholders and other supplemental data for each of the
years indicated. This information has been determined
based upon financial information provided in the
financial statements and market value data for the
Fund's common shares.
See Notes to Financial Statements.
16
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
The First Australia Prime Income Fund, Inc.
In our opinion, the accompanying statement of assets and
liabilities, including
the portfolio of investments, and the related statements of
operations, of cash
flows and of changes in net assets and the financial
highlights present fairly,
in all material respects, the financial position of The
First Australia Prime
Income Fund, Inc. (the ``Fund'') at October 31, 1996, the
results of its
operations and its cash flows for the year then ended, the
changes in its net
assets for each of the two years in the period then ended
and the financial
highlights for each of the five years in the period then
ended, in conformity
with generally accepted accounting principles. These
financial statements and
financial highlights (hereafter referred to as ``financial
statements'') are the
responsibility of the Fund's management; our responsibility
is to express an
opinion on these financial statements based on our audits.
We conducted our
audits of these financial statements in accordance with
generally accepted
auditing standards which require that we plan and perform
the audit to obtain
reasonable assurance about whether the financial statements
are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting
the amounts and disclosures in the financial statements,
assessing the
accounting principles used and significant estimates made by
management, and
evaluating the overall financial statement presentation. We
believe that our
audits, which included confirmation of securities at October
31, 1996 by
correspondence with the custodian and brokers, provide a
reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
December 10, 1996
17
FEDERAL TAX INFORMATION:
DIVIDENDS AND DISTRIBUTIONS
As required by Internal Revenue Code regulations, we are
to advise you within
60 days of the Fund's fiscal year end (October 31, 1996) as
to the tax status of
dividends, distributions and foreign tax credits paid by the
Fund during the
fiscal year. During fiscal year 1995, the Fund paid
dividends from net
investment income and short-term capital gains which are
taxable as ordinary
income. These dividends do not qualify for the 70% dividends
received deduction
for corporations. The Fund also paid distributions from long-
term capital gains
which are taxable as such.
The Fund has elected to give the benefit of foreign tax
credits to its
shareholders in the amount designated below on a per share
basis. Accordingly,
shareholders who must report their gross income dividends
and distributions in a
federal income tax return will be entitled to a foreign tax
credit, or an
itemized deduction, in computing their U.S. income tax
liability. It is
generally more advantageous to claim a credit rather than to
take a deduction.
The following table allocates the dividends and
distributions paid by their
sources:
Dividend
Foreign and
Gross
Taxes Distributions
Common Shares Amount
Paid Paid
--------------------------------------------
- ------------------------------------
Ordinary Income:
Australia $
$ $
United States
- --
New Zealand
- --
Capital Gains: Short-Term
- --
Long-Term
- --
-------
- -- ------- -------------
$
$ $
-------
- -- ------- -------------
-------
- -- ------- -------------
Preferred Shares
--------------------------------------------
- ------------------------------------
Series A:
Ordinary Income:
Australia $
$ $
United States
- --
New Zealand
- --
-------
- -- ------- -------------
$
$ $
-------
- -- ------- -------------
-------
- -- ------- -------------
Series B:
Ordinary Income:
Australia $
$ $
United States
- --
New Zealand
- --
Capital Gains: Long-Term
- --
-------
- -- ------- -------------
$
$ $
-------
- -- ------- -------------
-------
- -- ------- -------------
Series C:
Ordinary Income:
Australia $
$ $
United States
- --
New Zealand
- --
Capital Gains: Long-Term
- --
-------
- -- ------- -------------
$
$ $
-------
- -- ------- -------------
-------
- -- ------- -------------
18
Dividend
Foreign and
Gross
Taxes Distributions
Preferred Shares Amount
Paid Paid
--------------------------------------------
- ------------------------------
Series D:
Ordinary Income:
Australia $
$ $
United States
- --
New Zealand
- --
Capital Gains: Long-Term
- --
---------
- ------- -------------
$
$ $
---------
- ------- -------------
---------
- ------- -------------
Series E:
Ordinary Income:
Australia $
$ $
United States
- --
New Zealand
- --
Capital Gains: Long-Term
- --
---------
- ------- -------------
$
$ $
---------
- ------- -------------
---------
- ------- -------------
Series F:
Ordinary Income:
Australia $
$ $
United States
- --
New Zealand
- --
Capital Gains: Long-term
- --
---------
- ------- -------------
$
$ $
---------
- ------- -------------
---------
- ------- -------------
Series G:
Ordinary Income:
Australia $
$ $
United States
- --
New Zealand
- --
Capital Gains: Long-term
- --
---------
- ------- -------------
$
$ $
---------
- ------- -------------
---------
- ------- -------------
Series H:
Ordinary Income:
Australia $
$ $
United States
- --
Capital Gains: Long-term
- --
---------
- ------- -------------
$
$ $
---------
- ------- -------------
---------
- ------- -------------
Series I:
Ordinary Income:
Australia $
$ $
United States
- --
Capital Gains: Long-term
- --
---------
- ------- -------------
$
$ $
---------
- ------- -------------
---------
- ------- -------------
19
Although the Fund has made the election required to make
this credit or
deduction available to you, the amount of allowable tax
credit is subject to
Section 904 of the Internal Revenue Code. Shareholders are
advised to consult
their own tax advisers with respect to the tax consequences
of their investment
in the Fund.
In January 1997 shareholders will receive Form 1099-DIV,
or substitute
1099-DIV, which will reflect the amount of dividends and
distributions and
foreign taxes to be used by calendar year taxpayers on their
1996 federal income
tax returns.
20
OTHER INFORMATION
Dividend Reinvestment and Cash Purchase Plan.
Shareholders may elect to have
all distributions of dividends and capital gains
automatically reinvested in
Fund shares pursuant to the Fund's Dividend Reinvestment and
Cash Purchase Plan
(the Plan). Shareholders who do not participate in the Plan
will receive all
distributions in cash paid by check in United States dollars
mailed directly to
the shareholders of record (or if the shares are held in
street or other nominee
name, then to the nominee) by the custodian, as dividend
disbursing agent.
Shareholders who wish to participate in the Plan should
contact the Fund at
(800) 451-6788.
State Street Bank & Trust Co. (the Plan Agent) serves as
agent for the
shareholders in administering the Plan. Dividends and
capital gains
distributions payable to Plan Participants will be promptly
invested. If the
Fund declares an income dividend or capital gains
distribution payable in stock
to shareholders who are not Plan participants, then Plan
participants will
receive that dividend or distribution in newly issued shares
on identical terms
and conditions.
In every other case Plan Participants will receive shares
on the following
basis: If the market price of the Fund's common stock plus
any brokerage
commission is equal to or exceeds net asset value, Plan
participants will
receive newly issued shares valued at the greater of net
asset value or 95% of
current market price. If, on the other hand, the net asset
value plus any
brokerage commission exceeds the market price, the Plan
Agent will buy shares in
the open-market. If the market price plus any applicable
brokerage commission
exceeds net asset value before the Plan Agent has completed
its purchases, the
Fund will issue new shares to complete the program. All
reinvestments are in
full and fractional shares carried to three decimal places.
There is no charge to participants for reinvesting
dividends or capital gain
distributions, except for certain brokerage commissions, as
described below. The
Plan Agent's fees for the handling of the reinvestment of
dividends and
distributions will be paid by the Fund. There will be no
brokerage commissions
charged with respect to shares issued directly by the Fund.
However, each
participant will pay a pro rata share of brokerage
commissions incurred with
respect to the Plan Agent's open market purchases in
connection with the
reinvestment of dividends and distributions. The automatic
reinvestment of
dividends and distributions will not relieve participants of
any federal income
tax that may be payable on such dividends and distributions.
The Plan also allows participants to make optional cash
investments in Fund
shares through the Plan Agent on the open market.
The Fund reserves the right to amend or terminate the
Plan either in full or
partially upon 90 days' written or telephone notice to
shareholders of the Fund.
Participants in the Plan may withdraw from the Plan upon
written notice to
the Plan Agent and will receive certificates for whole
Shares and cash for
fractional Shares either in full or partially. In the
alternative, by giving
proper notice to the Plan Agent, participants may receive
cash in lieu of shares
in an amount which is reduced by brokerage commissions
incurred in connection
with the sale of shares and a $2.50 service fee.
All correspondence concerning the Plan should be directed
to the Plan Agent,
State Street Bank & Trust Company, P.O. Box 8200, Boston, MA
02266-8200.
21
Directors
Anthony E. Aaronson
Sir Roden Cutler
David Lindsay Elsum
Rt. Hon. Malcolm Fraser
Laurence S. Freedman, Chairman
Michael R. Horsburgh
Harry A. Jacobs, Jr.
Howard A. Knight
Roger C. Maddock
David Manor
Neville J. Miles
William J. Potter
Peter D. Sacks
John T. Sheehy
Brian M. Sherman
Marvin Yontef
Officers
Brian M. Sherman, President
Laurence S. Freedman, Vice President
Ouma Sananikone-Fletcher, Assistant Vice President
and Chief Investment Officer
David Manor, Treasurer
Roy M. Randall, Secretary
Eugene S. Stark, Assistant Treasurer
Barry G. Sechos, Assistant Treasurer
Kenneth T. Kozlowski, Assistant Treasurer
Allan S. Mostoff, Assistant Secretary
Margaret A. Bancroft, Assistant Secretary
This report, including the financial statements herein, is
transmitted to the
shareholders of The First Australia Prime Income Fund, Inc.
for their
information. This is not a prospectus, circular or
representation intended for
use in the purchase of shares of the Fund or any securities
mentioned in this
report.
Notice is hereby given in accordance with Section 23(c) of
the Investment
Company Act of 1940 that the Fund may purchase, from time to
time, shares of its
common stock in the open market.
- ------------------------------------------------------------
- -------
- ------------------------------------------------------------
- -------
Investment Manager
EquitiLink International Management Limited
Union House, Union Street
St. Helier, Jersey, Channel Islands
Investment Adviser
EquitiLink Australia Limited
190 George Street
Sydney, NSW 2000, Australia
Consultant
The Prudential Insurance Company of America
Prudential Plaza
Newark, New Jersey 07101
Administrator
Prudential Mutual Fund Management, LLC.
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian and Transfer Agent
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Auction Agent
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
Legal Counsel
Dechert Price & Rhoads
1500 K Street N.W.
Washington, D.C. 20005
Freehill, Hollingdale and Page
19-29 Martin Place
Sydney, NSW 2000, Australia
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
for information call toll-free (800) 362-
3277
collect (201) 367-7403
or for information regarding net asset
value
(800) 451-6788
The common shares of The First Australia Prime Income
Fund, Inc. are
traded on the American Stock Exchange and on the Pacific
Stock Exchange
under the symbol ``FAX''. Information about the Fund's net
asset value and
market price is published weekly in Barron's and in the
Monday edition of
The Wall Street Journal.
For a weekly update of the Fund's net asset value and
share price, or to
receive more information on the Fund, call toll-free:
1-800-323-9995
318653102
(R)
The First Australia
Prime Income
Fund, Inc.
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Annual Report
October 31, 1996
Highlights
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